Cryptocurrency is the big talking point in finance. Is it the future of finance or a re-incarnation of the Tulip Bubble, the South Sea Bubble, and even the Dotcom bubble rolled into one?
Sometimes it feels like complex terms are being used just to confuse people. The world of cryptocurrency revolves around new jargon and terminologies that can be even more complicated to understand than the currency itself.
But don’t worry, Hard Fork has got your back. If you want to know your JOMO from your FOMO, your BUIDL from your HODL, then you have come to the right place!
Moon When holders of a cryptocurrency feel confident, they talk of it going “to the moon” – when it explodes in price and makes them wealthy. If a currency gets a sudden price spike, then this is called ‘mooning’.
FOMO (Fear of Missing Out) FOMO is used to persuade new traders to place huge investments in cryptocurrency to avoid missing out on high returns – the type of emotional fear that results in people making impulsive decisions to buy tokens when they are at their highest.
However, making financial decisions on the back of sentiment is unlikely to be a good decision, and chasing performance after the event rarely results in a good outcome. Warren Buffett hit the nail on the head when he said, “Be greedy when others are fearful”.
The time to buy is at the bottom and the time to take profits is at the top. Remember, it isn’t a profit until you’ve banked it!
JOMO is the Joy of Missing Out – and is usually referred to when going off-grid from social media
HODL Originally the misspelling of “HOLD,” it has now converted to “Hold On for Dear Life.” This term is used when short-term volatility is high, and the prices of the cryptocurrency keep fluctuating. When the price of a certain digital currency falls, it is advised to keep “holding onto it for dear life” instead of frantically selling it at a loss.
BUIDL is the misspelling of BUILD – it is about building the technology because people believe in it.
FUD (Fear, Uncertainty, Doubt) This is a strategy used by crypto investors to spread misinformation and doubt regarding a trade deal or a competitor’s forecast price, commonly used to drive down the prices of any digital currency. However, the power of FUD is such that it has the potential to burst bubbles within the market.
For instance, the price of many cryptocurrencies seems to be directly related to how Elon Musk feels on any given day. If he feels good and, for instance, wants to accept Bitcoin for Tesla cars then it goes up massively – like one of his rockets – but when he has a downer on it because or environmental issues then it drops like a stone.
BTD (Buy The Dip) This trading strategy focuses on benefiting from the potential price increase after a recent dip in the crypto market. Crypto enthusiasts wait till a currency goes down and then buy it – and as soon as they see an increase in value, they sell it at a profit. Exactly what Warren Buffett would have wanted.
WHALE A figure of speech used to describe those individuals that own a significant amount of cryptocurrency and deliberately sell their holdings to bring the prices down. In doing this, they sell their cryptocurrency at the market rate and then buy it again when it’s cheaper.
This is not the most ethical way of trading, but this manipulative strategy definitely works for those individuals whose holdings are so significant that every trade results in massive price corrections.
LAMBO Short for Lamborghini, this term symbolizes the culture of getting rich quick and represents the life of luxury that can allegedly be achieved by crypto holders. Back in 2013, a story of a user who bought a brand-new Lamborghini using Bitcoin went viral, inspiring thousands to do the same.
All these acronyms and strategies convey a sense of value – and FOMO means that many people want to be in on the action. In fact, there are now over 2.3 million people holding crypto assets in the UK.
However, tread carefully! The Governor of the Bank of England said that cryptocurrencies have “no intrinsic value” and that people who invest in them should be “prepared to lose all their money”. There is also no protection for any losses, however caused, and no regulation.
And, just in case you were wondering, Hard Fork relates to blockchain technology, and is a radical change to a network’s protocol that makes previously invalid blocks and transactions valid, or vice-versa. I bet you are glad we cleared that one up!
If reading this has made you think that it is time to sharpen up your finances, then please give us a call. We are experts in cutting through the jargon and making simple sense of your finances.